Correlation Between North European and Inpex Corp
Can any of the company-specific risk be diversified away by investing in both North European and Inpex Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining North European and Inpex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North European Oil and Inpex Corp ADR, you can compare the effects of market volatilities on North European and Inpex Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in North European with a short position of Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of North European and Inpex Corp.
Diversification Opportunities for North European and Inpex Corp
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and Inpex is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding North European Oil and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR and North European is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on North European Oil are associated (or correlated) with Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of North European i.e., North European and Inpex Corp go up and down completely randomly.
Pair Corralation between North European and Inpex Corp
Considering the 90-day investment horizon North European Oil is expected to generate 1.64 times more return on investment than Inpex Corp. However, North European is 1.64 times more volatile than Inpex Corp ADR. It trades about 0.02 of its potential returns per unit of risk. Inpex Corp ADR is currently generating about -0.16 per unit of risk. If you would invest 451.00 in North European Oil on November 3, 2024 and sell it today you would earn a total of 1.00 from holding North European Oil or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North European Oil vs. Inpex Corp ADR
Performance |
| Timeline |
| North European Oil |
| Inpex Corp ADR |
North European and Inpex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North European and Inpex Corp
The main advantage of trading using opposite North European and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North European position performs unexpectedly, Inpex Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inpex Corp will offset losses from the drop in Inpex Corp's long position.| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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